USD-KRW Exchange Rate Touches 1240 Won Intraday... Treasury Bond Yields Fall Across the Board (Update)

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] On the morning of the 17th, the KRW-USD exchange rate surged by more than 10 won.

In the Seoul foreign exchange market, as of 9:20 a.m. that day, the KRW-USD exchange rate recorded 1,238.3 won per dollar, up 12.3 won from the previous day. The exchange rate started at 1,231.0 won, up 5.0 won, and then rapidly increased its rise.

In the early session, the exchange rate even soared to 1,240 won. It is the first time since February 29, 2016 (1,245.3 won) that the intraday exchange rate rose to the 1,240 won level.

Due to the Bank of Korea's sudden cut of the base interest rate to the 0% level, the early session government bond yields all fell.

As of 9:30 a.m. that day in the Seoul bond market, the 3-year government bond yield recorded 1.019% per annum, down 8.0 basis points (1bp=0.01 percentage points) from the previous trading day. The 10-year yield fell 2.8bp to 1.496% per annum, the 5-year yield dropped 7.1bp to 1.197% per annum, and the 20-year yield declined 1.8bp to 1.522% per annum.

The decline in government bond yields appears to be influenced by the Bank of Korea's emergency Monetary Policy Committee meeting held the previous day, which lowered the base interest rate from 1.25% to 0.75%, a 0.50 percentage point cut.

This is the first time in history that the domestic base interest rate has entered the 0% range, and it is the third time the Bank of Korea has held an emergency Monetary Policy Committee meeting to cut rates, following the 9/11 terrorist attacks in 2001 and the financial crisis in 2008.

Meanwhile, in the New York stock market last night, major indices plunged again due to recession concerns caused by the novel coronavirus disease (COVID-19), despite the Federal Reserve's aggressive stimulus measures. U.S. President Donald Trump's concern that the COVID-19 situation could continue until August also widened the stock market's decline.

Although the Fed cut the base interest rate by 1 percentage point from 1.00%?1.25% to 0.00%?0.25%, and central banks around the world took measures, it seems they have not dispelled concerns about the economic recession caused by COVID-19.

This content was produced with the assistance of AI translation services.